Wait, GST is not a reality yet: It still has to cover 7 gruelling stepsNEW DELHI: The Rajya Sabha clearance to the GST Bill, touted as the biggest tax reform since India’s Independence, lifted market mood on Thursday, but only briefly. The bill is set to improve the government’s revenue and help it achieve better transmission of prices.

It is expected that certain goods, such as capital goods, would become cheaper by 12-14 per cent, increasing demand for them, raising investment and, thus, economic growth.

However, the landmark legislation still needs to clear some more hurdles before the bill becomes a law, enforceable by the April 1, 2017 deadline.

We list out the next key steps for the same:

1. The bill will now be sent to the Lok Sabha, which has already passed the bill but will have to discuss and ratify the amendments made in the Rajya Sabha. The BJP has majority in the Lower House and thus a quick clearance is a given. In case the amendments are not cleared, the bill will go to parliamentary committee, though the chances are slim.

2. One the amendments are cleared, then the bill will go to state assemblies for clearance. This would be an important step, as at least 50 per cent of states (i.e. 15 states) must approve the legislation. Only Tamil Nadu looks tough at the moment, as the AIADMK MPs skipped the voting in the Upper House on Wednesday. The BJP is in power in 13 states as on date, while JD-U – another strong backer of the GST legislation – is in power in Bihar. The Congress-ruled states too are likely to clear it.

3. The legislation will then go to the President, whose signature will turn it into a law ahead of its rollout by the intended deadline of April 1, 2017.

4. The next step will be the formation of the GST Council. This council will have representatives from both the Centre and states. All this will be made within 60 days of the enactment of the bill. It will decide the revenue neutral rate (RNR), the rate at which there will be no loss in aggregate central and state tax revenue.

5. The RNR will then get converted into a three-slab GST rate structure, depending on exemptions. Essential commodities will be charged at low rates offset by higher ‘sin’ taxes on goods considered to be luxuries. A so-called standard or GST rate will be the middle slab and will apply to most goods and services. The single GST rate will be split between and central GST and state GST. The split shares will be decided by the GST Council.

6. Three more laws will need to be passed: laws on the Central GST (CGST), integrated GST (IGST) and 29 separate state GST legislations (SGST)

While the first two laws will be cleared by Parliament, the third law will be cleared by the respective state assemblies.